The interesting thing about this article is how surprised most people who comment are by the percentage of revenue on the web versus "traditional media". Anyone who has ever looked into the medium as a revenue stream knows that there is little to no money in web advertising, and that greatly explains the difference in dollars expended.

An entire magazine can run from the advertising revenue generated by putting company's advertisements in front of qualified readers. Lots of them do, any that don't charge you subscription fees. The thing is that outside the techno-geek world, there are still a ton of very popular magazines, it is only in high-tech that the web has destroyed this medium and left the remnants of a couple of once-popular pubs limping along. Other areas of publishing have felt it, but like the breeze before the storm, not like the tsunami that swept through high tech publishing a year or two ago.

But in many respects, we broke the system. Magazines that provided useful services to readers went away, not out of lack of demand, but from lack of revenue. And you see, there is a problem. Web sites that ate the advertising budget that traditionally went to print publications sprang up on little or no budget, with the view that it didn't take much. And it doesn't until you are a professional publication and you need graphic artists and editors and other support items. The cost of a blog on a free hosting site is essentially just your time. But that's not a publication, it's a rambling of questionable quality.

And that's where the rub comes in. You see, since web pages that were start-ups could do everything on the cheap, they offered advertising on the cheap. A real life example (stripped of vendor name, but it was not F5) is that a major international tech firm paid $45,000 for a spread in a print magazine, and in the same month complained that $0.0075 per view of a qualified user - an IT person known to have an interest in their products - was too much. Let's ponder that for just an instant. In order to make up for that one single two-page advertisement, a web publication would have to generate 6,000,000 clicks. It doesn't take an IBM Senior Fellow (Hi Sach!) to figure out that it is highly unlikely for a web publication to generate the revenue that print publications did. And they will need to if they want to grow. You cannot continually pile more advertisements onto each page and increase your revenue, so you have to have more pages with content. And more content comes from man-hours. In high-tech, that content comes from relatively expensive man-hours.

The rub? Things tend toward pop-culture. Throw a few video game articles into your high-tech site, and they'll generate more users which equals more clicks - but it also means the users seeing vendor's advertisements are no longer qualified users, and a smart vendor will insist on paying even less, for it has been true forever that targeted/qualified advertising is worth a lot more than generic advertising. The kid looking for WoW hacks couldn't possibly care less about F5's products, using us as an example.

And it will have to change. Those who still wear their rose-colored glasses and toast the demise of traditional media miss the point - something is being taken from us, and something will have to replace it. And that something has to generate enough revenue to be profitable. What it will be, I don't know, but a new model will have to spring up, or online advertising rates will have to raise, because websites that appeal to everyone on the planet see a lot of traffic but are unlikely to offer specific information on your topic.

I was an employee of Network Computing Magazine for years and a freelancer for years before that, so I'll offer them up as an example. They used to be an independent publication with five test facilities costing hundreds of thousands of dollars to put together and tens of thousands each per year to maintain. Now they have a single lab and are folded into InformationWeek. If you read the labs pages of InformationWeek you'll see that they rarely have high-end hands-on testing anymore. Why? Because revenues dipped to the point that they couldn't maintain labs and staff capable of testing the latest 10Gig gear or the coolest new storage array. So now where do you go for unbiased test results? Tolly is paid by vendors to do their testing, Joe Bob Browning, guy who uses product X at work is not an unbiased source and normally can't provide hardcore test numbers. F5 ended up putting our testbed online so you could download it and do it yourself. Even if you have time for that, we're one vendor that effects maybe three subindustries with that test suite.

But web revenues (which from my admittedly limited understanding were not bad for the industry) did not make up for losses in print revenue. And so Network Computing went away. And you have less valuable information.

I'll be intrigued to see what business model springs up to replace seriously focused print magazines, but it's none of the ones out there today, and reading those numbers from Tech Crunch, remember that there's a lot more shift going on than dollars would represent, just because web advertising costs are a tiny percentage of traditional media, and in the long run that means people like you and I have less access to detailed and accurate information.

Thanks for the comment, and I apologize if I came across as implying that online advertising was useless. It is very important, but there has to be a viable business model for the people hosting the advertisements and for most products there has to be an avenue to highly qualified buyers. Magazines used to provide that avenue with a relatively stable business model, right not that avenue is difficult to find.

We're in the midst of change in that space, and I guess I'm saying "time to see the light at the end of the tunnel, what it will look like when we've settled back to the realm of some advertising being for mass markets and some being highly targeted and priced in a manner that is sustainable."

0

About DevCentral

We are a community of 300,000+ technical peers who solve problems together.